Senate Antitrust Committee Begins Probing AT&T Merger Deal

BY CCIA Staff
May 11, 2011

After putting AT&T, T-Mobile, Sprint and Cellular South CEOs under oath, Senators on the Judiciary subcommittee on antitrust asked tough questions about what the deal would really mean for the prices and service available to all mobile phone and Internet customers.
Chairman Kohl admonished AT&T’s CEO as a fellow businessman not to pretend the merger is in the national interest, just because it benefits his corporation and shareholders.
Senator Leahy, who chairs the full Judiciary Committee, pointed out that both AT&T and T-Mobile already have unused spectrum in rural areas that is not being built out. Leahy said he was skeptical about the claim that somehow post merger, the company would finally build out more wireless service in rural areas.
From the breadth and depth of the questions from other Senators, Chairman Leahy was clearly not the only one skeptical of AT&T’s promises that eliminating a major competitor for mobile phone and Internet services could somehow have consumer benefits.
Senator Grassley, R-Iowa, and Sen. Klobuchar, D-Minn., also tried to pin AT&T down on commitments on affordable rate plans and build out to rural areas, with Grassley noting AT&T “has yet to upgrade rural broadband.”
AT&T CEO Larry Stephenson largely made broad, general statements in response to build out questions and later dodged a question from Klobuchar asking about any real benefits to consumers with this merger with T-Mobile.
Stephenson responded, instead, by saying that “history has shown” mergers like this are capable of having consumer benefits – without actually promising anything on prices, service or buildout.
The following statement can be attributed to Computer & Communications Industry Association President & CEO Ed Black:
“We appreciate Congress holding a hearing on this merger deal, putting these folks under oath, and asking about the claims they’re making about service benefits and jobs preservation. There really are no benefits to the merger that could only be gained by eliminating a competitor.”
“When it comes to antitrust law, the case against the merger is a slam dunk. For regulators, 30 percent of the market is a red flag. AT&T is over that line and no amount of political or economic pressure can change that or AT&T’s history of abusing competitors. If this doesn’t meet the threshold to block a merger, I’d be at a loss to imagine what would. “
“If our antitrust laws are to be credible, this merger must be blocked. Under oath, AT&T did not deny that it has lots of spectrum that it is just not using. The problem with AT&T’s service is they have decided what’s best for profits is to not innovate and to complain of spectrum scarcity – rather than invest in solutions.”
The following can be attributed to CCIA VP Cathy Sloan:
“It was interesting that every senator who attended had multiple concerns. Despite repeated questions on consumer prices and buildout to rural areas in the next couple years, AT&T made no commitments even though they clearly have the spectrum now to do so.”
“AT&T admitted during the hearing that it focuses its resources on the best markets and the highest paying customers. It was trying to convince senators that T-Mobile really wasn’t a competitor because it focuses on the lower end of the market.  Right now those lower end customers actually have award-winning quality of service they only stand to lose with this acquisition.”
“Senators also tried to pin AT&T down on whether mobile wireless was a national market as it had argued during its acquisition of Cingular, or a regional and local one as it is now claiming for purposes of a merger with T-Mobile.   AT&T’s plea for local market analysis is an outdated and backward one recalling the bygone days of cellular duopoly by design where the FCC awarded licenses to deploy the new technology two to each city. That was the 1980s, before PCS auctions opened mobile wireless to new competition in the 1990s, which has benefitted us all.”

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